A day after announcing plans to increase the growth of its user base, Twitter received a junk rating on its bonds from the independent credit risk ratings service Standard & Poor's.
The rating of BB — three levels below investment grade — is indicative of "major ongoing uncertainties or exposure to adverse business, financial, or economic conditions," according to S&P's category definitions.
S&P said the microblogging company's $1.8 billion in convertible notes carries "significant" financial risk. The statement sent Twitter's shares falling 5.9% to $40.04 at the close of trading in New York.
The junk rating comes amid concerns about Twitter's slowed growth. Twitter's monthly active user count rose 23% to 284 million in the third quarter, down from 24% growth the prior quarter.
S&P analyst Andy Liu wrote that Twitter's potential for growth remains strong, but "the company will need to make continual, sizable investments in its products and services to ensure growth and innovation, as well as maintain its relevance with its users."
Twitter appears to have already taken heed, with Chief Executive Dick Costolo recently announcing that the company has plans to capture an audience of users who currently visit the website but haven't yet signed up. At a meeting with industry analysts this week, Costolo revealed that the company was working on tools and features that will make it easier for new users to sign up.